The Effect of Fragile States on Foreign Direct Investment in OPEC Countries

The current study examines the impact of fragile states index on foreign direct investment in OPEC countries during 2006 to 2020. In order to investigate the impact of the components of the fragile states index on the inflow of foreign direct investment, the panel data method and STATA17 software have been used in this analysis. The results of the study show that the total FSI fragility index has a negative effect on the attraction of foreign direct investment in the studied countries. Also, in examining the effect of various components of the fragile states index (economic, social and political/cohesion), only the political and cohesion index has a significant and negative effect on the inflow of foreign direct investment, and the effect of economic and social components on the inflow of FDI is not significant. In other words, foreign investors are not sensitive to the economic situation and social environment of the investment destination country, and in fact, the security of the investment environment is effective in attracting foreign direct investment.